Software's Newest Niche

Thanks in part to the Google-YouTube deal, a host of new software products aim to help companies identify copyrighted material quickly and accurately

by Olga Kharif

In the aftermath of Google's announcement that it would pay $1.65 billion for video site YouTube, a burning question remains on many observers' minds: How is the Web-search titan going to keep copyrighted material from ending up on YouTube? And, more to the point: What are Google CEO Eric Schmidt and his team going to do about the costly litigation that would result if they fail?

Executives at both companies tried to answer these questions in the hours before the pact was revealed, as YouTube inked deals with Universal Music Group and Sony BMG that ensured the site's users could watch copyrighted works legally, and even incorporate copyrighted music into homemade videos.

Unclear Rules

But the copyright conundrum is far from resolved for Google, YouTube, and legions of other sites that specialize in user-generated content. Some analysts reckon that half the content on some sites is illegally distributed. "All you have to do is look at top-10 lists at these sites," says Josh Bernoff, an analyst with Forrester Research. "Most of them are copyrighted and there illegally." The problem is only snowballing as the number of sites multiplies and traffic surges.

It's not that companies aren't trying. While there are tools designed to detect and block illegal copyrighted audio, "there's currently no video filtering device on the market that works," says a MySpace spokesperson. While many Web video-sharers have considered using different software tools before, they claim that these have returned too many false-positives—or videos that really didn't include illegal material. Lacking a good tool, sites fell back on employing dozens of staffers to sift through postings, searching manually for offending material. That's no mean feat for a site that streams millions, if not tens of millions, of videos a day.

Attacking the Problem

But a vanguard of software developers is aiming to turn the tide on filtering copyrighted material—and their handiwork is expected to hit the market in the coming months. Some of this new software is being developed internally. In late November, News Corp.'s (NWS) MySpace began testing an automated take-down tool that will help content providers like Fox flag infringing content for MySpace to remove. Google (GOOG) is expected to release a search tool by year's end, designed to crawl YouTube's postings and detect offending content. Google did not respond to requests for comment.

A slew of specialized software makers are releasing new kinds of technology that promise nearly 100% reliability in detecting copyrighted works. On Nov. 28, Audible Magic, which has long provided music-protection tools to music studios, unveiled its Motional Media Identification software, a sort of fingerprinting for video. The tool collects information about a video's unique properties, related to how it was shot and edited, and uses that unique fingerprint to help content owners discover it later on the Web. The software will become commercially available in the first quarter of 2007, says Vance Ikezoeye, the company's CEO.

Other outfits promise releases in the next few months as well, as they expect the video authentication market to be many times larger than the market for software that safeguards music copyrights. Just how much money is there in such filtering software? The market is at its inception, so estimates are hard to come by. But revenue from user-generated content sites should reach $850 million by 2010, up from $80.6 million this year, according to In-Stat. Software makers are eager to tap into such growth rates.

Audible Magic rival Gracenote, offering audio authentication tools that MySpace recently began to use, charges between $10,000 and $100,000 a year in licensing per client, depending on volume of queries. It could charge a premium for the planned video detection tool.